Note: This post also appears in the latest issue of Lives and Landscapes.
The MSU Extension EconTools website is full of interactive tools to aid in farm management decisions. We have just added a new resource, the Montana Wheat Basis Database.
What is basis?
Basis is the difference between the local price of wheat at a specific grain delivery location and the futures contract price. The difference in price can be the result of several factors including but not limited to the costs of transportation, local market dynamics, and quality differentiation. Basis is used by producers and grain merchants as one of the primary tools to gauge current market conditions relative to longer run averages, as well as to compare local market conditions to one another.
The website msuextension.org/basis maintains historical basis information for six regional markets in Montana as well as local (spot) and futures market prices for hard red winter and dark northern spring wheat at varying protein levels. The website provides tools for comparing daily basis across wheat classes, protein levels, and locations over a ten-year time period. These data are publicly available from the USDA Agricultural Marketing Service and Quandl.com. Msuextension.org/basis automatically downloads new price information daily.
Written guides interpret the different variables tracked by the website, as well as provide information on how to put together useful charts and graphs. You can also download data as Excel spreadsheets.
Check out the EconTools website at msuextension.org/econtools for more resources like this one. Other EconTools include price tracking for cattle, hay, and grains, calculators to assist in determining economically optimal fertilizer application rates, grazing lease fees, and other resources.
